Heineken warned of weak sales ahead

The world’s third largest beer makers, Heineken NV, have forecasted depressed consumer confidence which signals that the poor summer weather would hit second-half figures after first-half profit fell short of expectation.
Heineken, which is Europe’s largest brewer and the dominant brewer in Sierra Leone and Nigeria and has more than 40 percent of the Mexican market, said on Wednesday that trading conditions remained favorable in Latin America, sub-Saharan Africa and Asia-Pacific, but not in developed markets. “Volume development in parts of Europe and the United States is expected to remain challenging given the current economic uncertainty, high unemployment and ongoing weak consumer confidence,” it said in a statement released this week.
The Dutch brewer said it had already experienced weak beer sales in the normally high-selling season of July and early August due to poor summer weather in Europe and worsening consumer sentiment there and in the United States.
According to figures available to Awoko Business Heineken is the market leader in Greece and Italy and the number two in Ireland, Portugal and Spain, countries either bailed out or seen by many in the financial markets as in line for rescue. Accordingly, the company is saying that this would affect second-half volumes and profit and it now expected full-year net profit before exceptional items and amortization of brands to be broadly in line with last year’s level on a like-for-like basis.
Andrew Giles, a brewing analyst in London told City of London Journalists that “first-half results were below consensus and they say it’s going to get worse in the second half….it’s an implicit profit warning of at least 15 percent,” he observed last night. The company’s shares were the weakest in the FTEurofirst 300 index of leading European stocks in initial trading, dropping by as much as 16 percent to 30, 40 euros, their lowest level in 21 months.
The company reported first half operating profit of 1.26 billion euros, up 3.9 percent, compared with analysts’ consensus forecast of 1.32 billion euros. Brewing experts pointed that they believed Heineken would forecast net profit growth of a mid single-digit to a low double-digit percentage.
In the first half, the comparable net profit figures rose 5.7 percent, excluding new consolidations and currency effects, to 694 million euros, below the average forecast in a recent trading poll of 746 min euros.